S’pore investors cautious about property investments in M’sia

The recent slump in the Malaysian Ringgit against the Sing dollar did not spark any frenzied property buying across the Causeway among Singapore investors, according to some real estate agencies.

OrangeTee and SLP International Property Consultants observed that investors have become increasingly cautious about property investments in Malaysia.

Iskandar Malaysia, a special economic zone north of Singapore, has been a popular investment destination for home buyers last year as some investors were shut out of the Singapore property market due to new loan curbs and cooling measures.

Market players project that on average, Singapore investors accounted for roughly one-third of the sales transactions at new property launches in Iskandar.

But buying activity has slowed in recent months.

Analysts said investors are now more cautious when it comes to property investment in Malaysia. There is also an increasing awareness of a large supply of new units that will be coming on stream in Iskandar Malaysia.

Property agents estimated that some 50,000 to 60,000 new residential units will be available in Iskandar’s Flagship zone A and B in the next three to five years.

There is also greater uncertainty surrounding real estate investment in Malaysia amid new property measures.

These include rules that restrict foreigners to property purchase of homes priced above 1 million ringgit, as well as the higher Real Property Gains Tax. The latter will see foreigners taxed 30 per cent on gains they make on property sold within five years of purchase.

Johnny Chng, head of international projects at OrangeTee, said: “Investors in general would want a clearer picture. They would be scrutinising every project, and they will be very selective when they do their investment.”

Investors are also mindful that home prices in some areas have doubled in the past year.

Analysts said current launch prices of homes in Flagship zone A, which includes Danga Bay, could start from 1,200 ringgit per square foot.

Nicholas Mak, executive director at SLP International Property Consultants, said: “Right now the weakening Malaysian ringgit is more of a short term, well, had just happened recently. It may not be enough to spur a surge in buying.

“But if the Malaysian ringgit continues to remain fairly low against the Sing dollar, probably in the next three to six months, we could see a gradual pick up in buying interest again from Singaporean investors.”

Mr Mak added that the cheaper ringgit is unlikely to erode rental yield just yet as rent contracts are typically locked in for at least a 12-month period, and less likely to be affected by short-term currency fluctuations.

Apart from Iskandar, Singapore investors also favour properties in Kuala Lumpur and Penang.